Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I move amendment No. 43:

In page 39, between lines 7 and 8, to insert the following:

"Losses forward for financial institutions

22. The Minister shall within 6 months of the passing of this Act, prepare and lay before the Oireachtas a report on the potential impacts on restricting loss relief brought forward for financial institutions in Ireland.".

This proposal relates to bank losses and deferred tax assets the banks are holding. There was some discussion on this yesterday with Deputy Burton, where reference was made to the provision in the National Asset Management Agency Act 2009 of a restriction limiting the amount of trading losses incurred by a NAMA-participating bank that could be set off against future trading profits. The set-off was limited to 50% of the profit in any given year but, in the Finance Act 2014, the Minister's predecessor removed that restriction. Our awareness of the current position of the banks comes from their published accounts. As at June 2017, Bank of Ireland's deferred tax assets included an amount of €1.251 billion in respect of tax losses available to relieve future profits from tax. AIB, at December 2016, had deferred tax assets of €2.928 billion. In its 2016 annual report, Permanent TSB showed a deferred tax asset on tax losses carried forward of €373 million. This equates to tax losses of some €2.98 billion and the estimation is that it will take 22 years for those losses to be utilised. We heard similar estimates from the other banks when their representatives appeared before the committee recently.

What is the Government's position on this issue, with specific reference to the change introduced in 2014? Is the Minister holding the possibility of a potential change to the provision as a stick he may use in his dealings with the banks concerning the tracker mortgage issue? Is it one of the weapons he hinted he might use in the event the banks do not meet their responsibilities in this regard? I am well aware that trading losses carried forward are an important feature of our corporation tax code. However, the circumstances here are truly exceptional and the provision does, therefore, warrant examination. Will the Minister comment on the capital position of the banks in which we own shares? Has an analysis been done, for example, of what a change in the existing provision would mean for them from a capital perspective? As I understand it, these deferred tax assets are recognised as core tier 1 capital. As such, has the Department done an assessment of whether or not a change which impacted on the figures might require the State to stump up more capital to put into the banks? I would want to see that analysis before making any decision on this issue.